March 20, 2023

Inland Empire Q4 Multifamily Market Report: Tight operating conditions and ongoing demand fueling new development

Highlights:

Operating conditions cooled during the fourth quarter with rents declining and vacancy inching higher. After a slowdown in apartment deliveries in 2021, developers were more active in 2022 with the completion of roughly 2,370 units for the year. New construction will accelerate again in 2023.
Local vacancy ticked higher before the end of 2022, rising 10 basis points during the fourth quarter to 3 percent. Despite the minimal increase at the end of the year, the rate still declined 10 basis points in 2022, the second consecutive year where conditions tightened.
Rent trends were also mixed in 2022. For the full year, asking rents rose 5.1 percent to $1,818 per month. During the fourth quarter, however, rents dipped nearly 2 percent, offsetting some of the year’s earlier gains.
The multifamily investment market slowed in the final few months of the year even as pricing remained well above the 2021 figure. The median sales price in 2022 was $334,500 per unit, up 26 percent from the median price in 2021. Cap rates averaged around 3.75 percent during the fourth quarter.